Thursday, May 11, 2006

Stephan Harper's first budget, while making little economic and social sense, makes a great deal of political sense. Tidbits of spending are distributed to enough disparate groups to aim at luring a majority-making coalition of diverse interests. At the same time, Harper toughly enforces quiet from party members known for blurting out embarrassing, socially-backward views.

His minority government represents little more than an intense public relations effort to achieve majority government, free of existing artificial restraints. The hazards this represents are suggested even under current restraints.

Why do I say the budget makes little economic sense? Every trained economist, including Harper, knows that skewing taxes back to favor consumption - his lowering of the GST (Goods and Services Tax) - is in principle unsound policy.

But if you were determined to re-tilt taxes to favor consumption, a tiny change is not the way to do it, because it is costly and inefficient to re-set the system for a consumer gain of one percent. A huge effort is now needed to re-program or replace countless cash registers and calculators, not to mention the reprinting of forms, receipts, and reports of many kinds.

In economics, often, events that mean one thing for individuals mean something else for the community. Thus, Harper's small change in the GST, which will be almost imperceptible to consumers in their individual purchases, still will manage to deprive the federal treasury of a substantial annual sum.

The measure does keep a campaign promise, but it was never a sensible promise, tailored, as it was, to appeal to people's prejudice towards a tax that features in most purchases, a promise offered without explaining the necessary consequences for federal finances.

It is dishonest to speak of Harper's daycare policy because he truly doesn't have one. His hundred-dollars-a-month give-away is simply a new baby bonus, as economically and socially useless as the old one. Harper's crowd likes to talk of choice - a word that has become sacred writ with America's Right Wing in everything except wars - but there's no choice purchased for a hundred dollars a month in the daycare market. If you were thoroughly honest in your conservative principles, you would forget the new baby bonus and just tell everyone they have their own choices.

But that wouldn't do politically, would it? Harper's new baby bonus will flatter with the stay-at-home type of mothers, including importantly the Christian Right ones who see what they do almost as a sacrament, while offering a small resource for grannies raising their second generation. Poor women will get no daycare out of the monthly cheque. Still, who doesn't like receiving a cheque every month with your name on it?

I don't like being cynical, but, since this policy of Harper's is itself almost pure cynicism, additional cynicism is not out of place. The Liberal candidate who said before the election that the cheque would mean cigarette-and-beer money for many was being quite honest before he was silenced.

Harper’s rejection of Kyoto puts his party’s short-term interests ahead of the nation’s international undertakings on a deadly-serious problem. His talk about a "made in Canada" solution ignores the nature of the problem while introducing a confusing appeal to nationalism. Global warming is a world problem requiring a coordinated world response. Too few people appreciate the immense effort, years of effort, behind an international treaty like Kyoto.

Harper puts the straw-man argument that Kyoto itself is inadequate, well aware that all participants regard it as only the first step. One wag accurately observed in Parliament that the Prime Minister seems to regard "not cutting and running" as applying only to Canada’s combat forces in Afghanistan.

Conservative observations about the U.S., outside Kyoto, doing better than Canada, inside Kyoto, are dishonest or uninformed. What is happening is that the U.S. has effectively exported to Alberta the pollution associated with a large, secure expansion of its oil supply. Tarsand-extraction projects now underway, largely financed by U.S. companies and worth somewhere between $60 and $90 billion, together represent the most polluting energy project on earth. The pollution of the tarsands is not limited to huge volumes of greenhouse gases, but include producing vast tracts of waste deserts and filthy ponds that will endure for centuries.

Harper's deliberate slights to Dalton McGuinty, premier of Ontario, offer an important insight into the Prime Minister's character. I am not a defender of McGuinty's odd and inconsistent behavior, but the premier of so important a province does deserve at least diplomatically-correct treatment from the national government.At first look, the slights seem merely petty, but on closer examination, they are much more. An effort to isolate and ignore opponents was a regular tactic of Mao Tse-Tung’s rise to power and reveals what is basically a tyrannical temperament. We previously heard reports of how stiff and cold Harper can be in private meetings towards people with whom he doesn't like talking. We've also seen, only recently, how he can suppress comment in his own caucus and with the press quite ruthlessly.

Now, we've seen Harper break a longstanding tradition of not attending fundraisers for provincial politicians and doing it immediately after an inadequate and much-delayed meeting with McGuinty. This is not promising for Canada's avoiding the bitter, empty partisanship of American politics.

Harper's general promises of openness appear heavily compromised. He is compromising his words about freedom of information, yet he is clearly banking on the idea that voters will regard him as honest and open if he keeps five promises.

Polls indicating Harper's increased popularity in Quebec represent a special confluence of events, offering Harper an opportunity unique in recent history. The first of these events is the growing tiredness of the separatist movement. Try as he will, Gilles Duceppe cannot increase his support in Quebec. In part, Quebeckers may be growing tired of his party, the Bloc Quebecois. In part, Quebeckers may themselves increasingly recognize that separatism is a slowly-fading dream, and, in part, they may be tired of Duceppe's often odd, even clownish, manner.

Quebeckers for some years have used this odd party to register protest votes. At some point though, it must seem pointless to register votes with a party that has almost no interest in national policies and can offer few initiatives for practical problems. To address this, Duceppe must increasingly act out of pragmatism, as he did in supporting a budget he ordinarily would certainly otherwise reject on principle. But to the degree that Duceppe behaves this way, he alienates his base constituency of separatists. Also, his opportunity with the present government to act pragmatically is limited to supporting conservative measures, again something that may alienate his base constituency which tends to be quite liberal.

Another factor is, of course, Quebec's anger with the national Liberals over scandal, something that will not pass quickly, because there is a stinging sense of embarrassment behind it.

The complex situation is compounded by the unpopularity of Quebec’s premier and provincial Liberal party leader, Jean Charest, a former Conservative and pretty much still one in spirit. Harper is prepared to make concessions that are snapped up by a provincial government eager for any good news. Each of these concessions tends to boost Harper’s credibility in Quebec while maintaining an appearance of working against separatism, the provincial Parti Quebecois being the alternative to Charest. This appearance is important to offset the fact that at the national level Harper’s only likely partner in legislation is the Bloc Quebecois.

But there is considerable potential that participation in Afghanistan will damage Harper’s potential gains in Quebec. Canadians are divided about Afghanistan, but Quebeckers are much less so. Polls show them strongly opposed. If a real string of deaths and injuries occurs, as seems likely judging by the increased activity of Taleban forces, the view of Harper will darken. This will be true in Canada generally, but especially so in Quebec. Harper knows this, and his arbitrary rule about the press at the return of servicemen’s remains is certainly a reflection of this. It is what George Bush has long done.